Bribery charges feared to hurt builders' overseas businesses By Park Jae-hyukLocal builders are expected to face more difficulties in getting overseas construction orders as they have been found to have used bribes ― not their competitiveness ― to win contracts here to rebuild old apartment complexes in southeastern Seoul.

Industry analysts say the revelation of the illegal conduct will allow Chinese and Indian builders to consolidate their domination of the global construction market.

According to the Seoul Metropolitan Police Agency, Wednesday, employees of Hyundai E&C, Lotte E&C and Daewoo E&C offered bribes to the residents of old apartments in southeastern Seoul from September to October 2017, ahead of votes to select companies to redevelop the massive complexes.

In Korea, residents of apartment complexes designated to be rebuilt organize a residents' group which conducts a vote to select a company to rebuild their properties.

Police said Daewoo, Lotte and Hyundai respectively gave 230 million won ($200,000), 200 million won and 110 million won to the residents living in the nation's wealthiest area.

The companies were also found to have offered tablet PCs and vouchers for a luxury hotel.

After bribing the residents, Hyundai, Lotte and Daewoo won contracts for the reconstructions of the Banpo, Shinbanpo and Jamsil areas, respectively.

The builders have denied their accusations, saying they were unaware of the illegal actions of their "PR agencies."

Police, however, filed charges against employees of the builders with the prosecution, because they discovered the PR agencies had told the builders what they had done.

Industry analysts expect the recent bribery scandal will negatively affect Korea's overseas construction orders which have already become sluggish over the past few years.

"As Korean builders have focused only on the domestic housing market, they have been lagging behind the foreign competition," a construction industry official said. "Korean builders are inferior to those in China and India in terms of cost effectiveness. Moreover, they now fall behind Chinese firms in terms of technical skills."

He said Korean builders should improve their competitiveness, if they want to get more orders abroad.

In 2017, Minister of Land, Infrastructure and Transport Kim Hyun-mee also urged builders to head into overseas markets, rather than participating in the fierce competition to win contracts to reconstruct luxury apartment complexes here.

The government put forward a plan in January, to expand the presence of Korean builders in the overseas infrastructure market.

However, the situation did not get better.

According to the International Contractors Association of Korea, the value of overseas construction orders is unlikely to exceed $30 billion again this year, considering that Korean firms collectively received orders worth $26.6 billion as of Monday.

The amount of overseas construction orders has been below $30 billion, since it dropped to $28.2 in 2016 from $46.1 billion in 2015.